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SNAP is down ~$3 (27%) after hours. Revenue has increased 6% YoY. Average revenue per User is down to $3.11 Q3 2022, from $3.49 Q3 2021. Net loss is $360m Q3

by brad0 4y ago

SNAP is down ~$3 (27%) after hours. Revenue has increased 6% YoY. Average revenue per User is down to $3.11 Q3 2022, from $3.49 Q3 2021. Net loss is $360m Q3 2022, from $72m Q3 2021. $155m of that was due to restructuring. Where does Snap go from here?

gsanderson 4y ago
I guess in the short-term, fire even more people to cut expenses. I recall they were planning to let 20% go. Longer-term, I guess hope to be acquired?
- deleted 4y ago
  [deleted]
- pclmulqdq 4y ago
  They need to hope for a corporate raider. They will take the company private, fire 90% of the staff, launch a new mediocre product as a smokescreen while monetizing the crap out of the old thing, and then turn the new, profitable company loose on the markets again.
dannyw 4y ago
Fire 90% of their team. Have a 500 people company, that's still 25x the size of the original WhatsApp.
- edmundsauto 4y ago
  Fire the team, load up with debt, plump the numbers and find a bigger fool. Mine the brand rep and loyal user base. Sounds like a private equity dream, if interest rates were lower.
- mhh__ 4y ago
  Whatsapp don't sell ads though Don't get me wrong I think you're probably right but snap's business model is not just a pure tech issue at scale, i.e. you need old fashioned sales
- mapme 4y ago
  I think this is an unhelpful comparison. Simply put, when users exchange messages on WhatsApp it causes minimal traffic to a WhatsApp data enter as it’s mostly p2p. No ads, no persistence. Snapchat requires semi persistence for stories (viewable for 24hr) and millions of users can view a single story. When a celebrity posts a story and 5mil users view it that requires more engineering effort that p2p what’s app messages. Additionally, serving ads requires a large amount of compute (ad ranking/serving), storage (impressions), offline processing (Hadoop clusters are hard), engineering, salepeople, economists, and auxiliary systems to support advertisers buying ads, etc. As an example, check out snaps blog post on ML and ads https://eng.snap.com/en-US/machine-learning-snap-ad-ranking https://eng.snap.com/en-US/machine-learning-snap-ad-ranking
jsemrau 4y ago
> Average revenue per User is down Given the increased competition in the ad-tech space this will be even worse in the future. [1] UBER https://app.finclout.io/t/10B6BLO https://app.finclout.io/t/10B6BLO. [2] APPLE https://app.finclout.io/t/akBr0Kr https://app.finclout.io/t/akBr0Kr
skeeter2020 4y ago
User growth is almost entirely outside of the US, where they make as little as 10x less revenue per user, while at the same time EU Rev down 5% and RoW Rev down 10%. What a dog.
- bushbaba 4y ago
  If EU Rev is measured in USD, it being down could be currency differences.
tfehring 4y ago
The drop in revenue per user is mostly due to regional mix. DAUs are up 34% Y/Y outside of North America and Europe, only 7% Y/Y in North America and Europe. Still, I think the answer is probably "aggressively cut expenses" and/or "position itself for an acquisition."
adam_arthur 4y ago
Same way Twitter is going to go under Elon. These companies are massive cash generating machines, that ultimately burn it all on excessive and unnecessary expenses. They've built a great and popular product, be content with that and run it like a real business rather than an incubator of failed ideas
- dragonwriter 4y ago
  > They've built a great and popular product, be content with that and run it like a real business rather than an incubator of failed ideas The problem for social media is that something new comes along, becomes popular, and displaces incumbents if they aren’t innovating, or at least adapting rapidly to innovation in the space. If you’re milking instead of moving, you’re going to wake up as MySpace.
  - adam_arthur 4y ago
    What has Twitter innovated on in the last 10 years? Granted they just released "Spaces" which is pretty nice, but I think you'll find the pace of innovation at these companies is quite low relative to their size. I think companies like SNAP and TWTR are fundamentally mismanaged on the product side. Very low output relative to the headcount. At the end of the day, some businesses are niche and limited in scale, and that's ok. Right now every larger tech company is run as if they're trying to become a huge conglomerate.
  - skippyboxedhero 4y ago
    Internal innovation will never be profitable. If you have a good idea, are you rushing to work for Twitter for $150k/year? No. Is anyone you hire likely to have an especially good idea? No, all the people with good ideas are self-employed...because they know the value of good ideas. It is far better to milk your cash cow, and invest in acquisitions where possible (now, almost impossible legally...so the only component of the strategy should be: milk cash cow, return excess value to shareholders).
    - Kon-Peki 4y ago
skippyboxedhero 4y ago
Many of these companies can be profitable, they just need far lower costs. Too many devs, too many PMs, too many marketing people. Imo, this is as much a problem of products being built with no regard for costs. Most tech companies have distinct development and product roles...so if this is going wrong, why even have the product people? The core product for SNAP should be highly cash-generative, this is the case for most tech companies. But, instead, they are often losing massive amounts of money because there is no economic logic to what they are doing. Most of these companies are run by people who got rich somewhat accidentally, by showing massive disregard to economic logic and then having an even dafter VC manager shove money into their mouth. The question is not where do they go, but whether the current managers have the stomach to get there.

by brad0 4y ago

gsanderson 4y ago

I guess in the short-term, fire even more people to cut expenses. I recall they were planning to let 20% go. Longer-term, I guess hope to be acquired?

deleted 4y ago
[deleted]
pclmulqdq 4y ago
They need to hope for a corporate raider. They will take the company private, fire 90% of the staff, launch a new mediocre product as a smokescreen while monetizing the crap out of the old thing, and then turn the new, profitable company loose on the markets again.

dannyw 4y ago

Fire 90% of their team. Have a 500 people company, that's still 25x the size of the original WhatsApp.

edmundsauto 4y ago
Fire the team, load up with debt, plump the numbers and find a bigger fool. Mine the brand rep and loyal user base. Sounds like a private equity dream, if interest rates were lower.
mhh__ 4y ago
Whatsapp don't sell ads though Don't get me wrong I think you're probably right but snap's business model is not just a pure tech issue at scale, i.e. you need old fashioned sales
mapme 4y ago
I think this is an unhelpful comparison. Simply put, when users exchange messages on WhatsApp it causes minimal traffic to a WhatsApp data enter as it’s mostly p2p. No ads, no persistence. Snapchat requires semi persistence for stories (viewable for 24hr) and millions of users can view a single story. When a celebrity posts a story and 5mil users view it that requires more engineering effort that p2p what’s app messages. Additionally, serving ads requires a large amount of compute (ad ranking/serving), storage (impressions), offline processing (Hadoop clusters are hard), engineering, salepeople, economists, and auxiliary systems to support advertisers buying ads, etc. As an example, check out snaps blog post on ML and ads https://eng.snap.com/en-US/machine-learning-snap-ad-ranking https://eng.snap.com/en-US/machine-learning-snap-ad-ranking

jsemrau 4y ago

> Average revenue per User is down Given the increased competition in the ad-tech space this will be even worse in the future. [1] UBER https://app.finclout.io/t/10B6BLO https://app.finclout.io/t/10B6BLO. [2] APPLE https://app.finclout.io/t/akBr0Kr https://app.finclout.io/t/akBr0Kr

skeeter2020 4y ago

User growth is almost entirely outside of the US, where they make as little as 10x less revenue per user, while at the same time EU Rev down 5% and RoW Rev down 10%. What a dog.

bushbaba 4y ago
If EU Rev is measured in USD, it being down could be currency differences.

tfehring 4y ago

The drop in revenue per user is mostly due to regional mix. DAUs are up 34% Y/Y outside of North America and Europe, only 7% Y/Y in North America and Europe. Still, I think the answer is probably "aggressively cut expenses" and/or "position itself for an acquisition."

adam_arthur 4y ago

Same way Twitter is going to go under Elon. These companies are massive cash generating machines, that ultimately burn it all on excessive and unnecessary expenses. They've built a great and popular product, be content with that and run it like a real business rather than an incubator of failed ideas

dragonwriter 4y ago
> They've built a great and popular product, be content with that and run it like a real business rather than an incubator of failed ideas The problem for social media is that something new comes along, becomes popular, and displaces incumbents if they aren’t innovating, or at least adapting rapidly to innovation in the space. If you’re milking instead of moving, you’re going to wake up as MySpace.
- adam_arthur 4y ago
  What has Twitter innovated on in the last 10 years? Granted they just released "Spaces" which is pretty nice, but I think you'll find the pace of innovation at these companies is quite low relative to their size. I think companies like SNAP and TWTR are fundamentally mismanaged on the product side. Very low output relative to the headcount. At the end of the day, some businesses are niche and limited in scale, and that's ok. Right now every larger tech company is run as if they're trying to become a huge conglomerate.
- skippyboxedhero 4y ago
  Internal innovation will never be profitable. If you have a good idea, are you rushing to work for Twitter for $150k/year? No. Is anyone you hire likely to have an especially good idea? No, all the people with good ideas are self-employed...because they know the value of good ideas. It is far better to milk your cash cow, and invest in acquisitions where possible (now, almost impossible legally...so the only component of the strategy should be: milk cash cow, return excess value to shareholders).
  - Kon-Peki 4y ago

skippyboxedhero 4y ago

Many of these companies can be profitable, they just need far lower costs. Too many devs, too many PMs, too many marketing people. Imo, this is as much a problem of products being built with no regard for costs. Most tech companies have distinct development and product roles...so if this is going wrong, why even have the product people? The core product for SNAP should be highly cash-generative, this is the case for most tech companies. But, instead, they are often losing massive amounts of money because there is no economic logic to what they are doing. Most of these companies are run by people who got rich somewhat accidentally, by showing massive disregard to economic logic and then having an even dafter VC manager shove money into their mouth. The question is not where do they go, but whether the current managers have the stomach to get there.